BEST ANSWER
Kenneth, you're obviously a number savvy guy but I would like to point out that you're asking us to compare apples to oranges.
A few questions/possible answers:
Are you trying to decide whether you're going to obtain a FHA renovation loan and comparing that loan and it's APR to a conventional loan that needs no work? That's what I took from your post, if so, I'm curious why it matters, you either need a rehab loan or you don't. If you have the cash and don't want to finance it into your loan and can close without needing a rehab loan, pay for it out of pocket. If you want to roll it in to the mortgage and keep your cash reserves, again the APR is moot because the decision isn't one loan vs another, it's cash reserves vs a larger financed amount (and therefore, larger payment).
If you're looking to compare a FHA renovation loan to a conventional renovation loan (we have this product), to decide which one makes more sense, you need to decide how much you want to put down. If you only want to put down 3.5%, you only have one option so APR is moot. If you want to put down 10% (currently this is the minimum for our owner occupied conventional renovation loan), you can do either loan program and the PMI will be roughly the same with the major difference that you're paying 1.75 points on the FHA version for the upfront mortgage insurance premium that is added to your loan, thus making your financed amount slightly higher, however there are advantages to doing the FHA version over the conventional one but those advantages are situational, you can contact me if you'd like to discuss your scenario further (my office is on North avenue) as I don't want to hijack your thread to talk about FHA vs Conventional pros/cons.
On a side note, I present quite often for Real Estate offices and occasionally, investor groups and APR is never a question that comes up, the things I pointed out are the common things that a consumer is trying to make a decision on. If you want to compare APR, compare identical products with different rate/costs
On a parting note, we'll talk about APR real quick: The APR hunt is only applicable if you never refinance your loan. I.E. If you have a loan with no closing costs @ say, 5.250% and another loan with a 5% rate and $2000 in closing costs (lets say, 5.15% APR in this example) but sell your home in eighteen months, you most likely wasted money getting the lower rate vs holding your home for ten years. Focus on what you really need (cash in the bank or lower payment / rehab loan or home in good shape / condo or single family / single family or multi-family / etc, etc, etc) and not so much on how books tell you to shop; your buying experience will be much more pleasurable.
My office is on North avenue and my contact info is in my bio if you want to setup an appointment.
Thu Jun 4 2009, 18:41
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